Customers advised to pay sales tax only to registered suppliers

ISLAMABAD: Federal Board of Revenue (FBR) on Thursday said that sales tax can only be recovered from customer if the supplier is registered for sales tax purpose.

The FBR issued Sales Tax Circular No. 02 of 2019 and said that it was observed in many cases, suppliers of goods and services were charging sales tax on invoices/ receipts without identifying their sales tax registration number (STRN) on the ‘Invoices/Receipts’ issued to the customers. At times, National Tax Number (NTN) is indicated on invoices, to exhibit that the supplier is registered.

The FBR suggested customers to ask for invoices/receipts having STRN on the invoices/receipts on purchase of goods and services. “Sales tax can only be recovered from the customer if the supplier is registered for sales tax purposes, and reflects the STRN on the invoice/receipt issued to the customer.”

In other cases, the supplier is not entitled to recover sales tax from the customers. “Customers should beware of the same.”

The FBR said many suppliers were charging sales tax from customers without getting them registered under the sales tax regime. This practice is against the law and is liable to penal action. “This practice leads to increase in prices and undue enrichment of sellers without any deposit of tax with the government,” the FBR said.

Customers are suggested to seek invoice/receipts from suppliers with STRN on the invoices/receipts issued, if sales tax is charged on their purchases.

The FBR further explained that buyer is not required to provide his NIC in case of purchases from a person not registered for sales tax.

The FBR also clarified that in case of purchase of third schedule items, which are subject to sales tax on the basis of retail price and on which retail price along with sales tax is legibly and indelibly printed or embossed, the sales tax on the same is deposited by the manufacturer or importer. “In case of such items, STRN may not be required if the same are purchased from a retailer,” the FBR said.

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